Affordable Housing trends on D-Street too

MUMBAI: Shares of companies associated with the affordable housing sector may get re-rated, and could attract greater interest from investors after the finance minister accorded infrastructure status to the sector in the Union Budget.

Companies such as Ashiana Housing, Puravankara surged up to 19% after the Budget announcements on Wednesday, while companies like Gruh Finance and DHFL, which provide loans to affordable housing for the middle and low income segments, rose up to 8%.

“There is some scope for the re-rating of the sector,“ said Daljeet Kohli, head of research at IndiaNivesh Securities. “Post the PM's speech in December, we have been positive on Ashiana Housing and have seen a build-up in the stock,“ he said.IndiaNivesh has set a target price of Rs 183 on the stock.

Infrastructure status could mean lower taxes, stamp duty, fewer permissions, reasoned experts. “There could be tax benefits for companies in the affordable housing sector and they would be able to raise funds at a lower cost,“ said Navneet Munot, ED & CIO, SBI Mutual Fund.

However, some analysts said they would prefer NBFCs to affordable housing construction players.